JPY Trading Outlook (06-08-2014)

USD/JPY USDJPY followed bond yields on a roundtrip route that ended with the pair essentially flat on the day. The early stock and yield (and USDJPY)bounce faded as Europe continued to underperform global equity markets, with the broad Eurostoxx index dipping into negative territory YTD. Amidst some talk of renewed Ukraine tension, the Dow Industrials then followed suit (negative YTD) as wider credit and lower commodities weighed on risk sentiment. Macroeconomically, the market is still inclined to sell Yen as falling JGB yields and some second guessing from the BOJ sets up a scenario where investors will start looking for another easing in October. But during the NorAm time zone the USDJPY trades as an interest rate derivative to the exclusion of nearly everything else. Support is still clustered nearby with the trendline (102.40), the 200 hma (102.32) and the 200 dma (102.22).